In a decision sure to send chills to employers with small branch offices in Connecticut, a Superior Court judge recently ruled that an employer’s out-of-state employees must be counted in figuring out if an employer is subject to the state’s FMLA rules.

Employers with 75 or more employees nationwide that have just one employee in Connecticut, may now be subject to Connecticut’s FMLA rules for that Connecticut employee.

This has huge implications for employers with small branch offices in Connecticut that, in the past, were not viewed as being covered under the state FMLA. It also has implications for employers based in Connecticut with less than 75 employees here but that have out-of-state workers.

Here’s the context:

Under federal FMLA law, an employer is subject to the FMLA when they employ 50 or more employees for each working day during each of 20 or more calendar workweeks in the current or preceding calendar year. But only certain types of employees are covered: The employee must be employed at a worksite where 50 or more employees are employed by the employer within 75 miles of that worksite.

In Connecticut, things are a little messier because Connecticut has its own version of FMLA that overlaps at times with the federal one. Under CTFMLA (Conn. Gen. Stat. 31-51kk(4), an employer "means a person engaged in any activity, enterprise or business who employs seventy-five or more employees." The language of the Connecticut law, however, does not have the same limitations on the "75 miles of the worksite" language found in federal law.

Nonetheless, the Connecticut Department of Labor has long taken the position that only Connecticut employees should be used in the calculation of determining whether a company is an "employer" under CTFMLA. Part of that arises from the fact that it seems natural to conclude the Connecticut only has jurisdiction over the part of the employer that is actually IN Connecticut.

In Velez, the Court overturned the Labor Department Commissioner’s decision approving of a hearing officer’s ruling. In doing so, the Court concludes that the DOL has made an "error of law." It does so by concluding that the legislative history and the language of the statute itself require that all employees of an employer must be included, not simply those that work in Connecticut:

In light of the purpose behind the 75-person exemption, the court cannot interpret the term "employee" as restricted to Connecticut employees so as to prohibit multi-state linking of employees. Such an interpretation would not only ignore the purpose of protecting Connecticut’s small employers but also skew the exemption in favor of entities that employ few Connecticut residents but have large numbers of personnel in other states.

Although this decision is likely to be appealed, its implications are potentially huge because, if allowed to stand, it would now provide leave rights to a group of employees who have never been understood to have those rights before.

Here’s an example of how this decision might work in practice:

Suppose an employer has 2 employees in each of the 50 states. Although the employer has 100 employees, none of those employees would be eligible for FMLA because of the worksite rules in the FMLA. However, those two Connecticut employees would now be eligible for Connecticut’s FMLA because under Velez, the employer would be deemed to employ over 75 employees.

For now, the decision is simply one Superior Court decision and it is unclear what the Connecticut Department of Labor’s stance will be going forward pending a possible appeal. Out-of-state companies with smaller Connecticut offices should certainly consult legal counsel however, to determine the possible impact that decision may have on the business and the approach that the employer wants to take in this time of uncertainty.

UPDATE: I have since learned that the Connecticut Department of Labor does indeed plan to appeal the decision. Stay tuned.

Dan, while your analysis of the background and decision are of course correct, your characterizations suggest a level of drama that I think is misplaced.
First, when you say that the CT DOL has “long taken the position” that only employers with 75 or more employees within the state of Connecticut are covered by the CT FMLA, it is worth noting that we are talking about a law that has only been in existence for 13 years and a fact pattern that has only arisen in three administrative decisions (including Velez) in that time. And since, other than those three cases, I have only ever seen the fact pattern arise with respect to one other client, I think it is fair to say that this is an issue that has not arisen frequently and will not arise frequently in the future.
Second, for the same reason I think your statement that the decision’s “implications are potentially huge….it would now provide leave rights to a group of employees who have never been understood to have those rights before” is overblown. This will have implications in the enforcement of the CT FMLA, a statute that has existed for 13 years, as to a small group of Connecticut employers. A significant subset of those employers who will now be affected by CT FMLA were already covered by federal FMLA. This will have some impact on them but, in the larger scheme of things, not that much. Certainly there are Connecticut employers whose Connecticut employees were previously not eligible for either state or federal FMLA who will have to deal with the impact of the decision…but of those, there is going to be a subset who already have to comply with federal or state FMLA-type laws in other jurisdictions.
Finally, you say that “it seems natural to conclude the Connecticut only has jurisdiction over the part of the employer that is actually IN Connecticut.” But in fact the court is not asserting jurisdiction over the part of the employer not in Connecticut. California employees of a company with employees in Connecticut still will not be able to come to Connecticut to sue. Only Connecticut employees of that employer can assert rights under the Connecticut FMLA.
And by the way, there are already a number of states that have FMLA-type laws that either apply those laws to ALL employers with employees in their state, to all employers with a very small numeric threshold such as ten or more employees, or to all employers with a total of a certain number of employees, including both in state and out of state employees. So Connecticut is not going to be out there struggling alone with the floodgates of litigation open wide. FMLA-type laws that go beyond the federal statute in one way or another are likely to be more and more commonplace.
On the other hand, there is a fairness issue for employers that bears mentioning. Before Velez, if you were a smaller employer operating only in Connecticut with, say, 80 employees, you were covered by the CT FMLA (and in most circumstances by the federal FMLA too). But your competitor with 49 employees in Connecticut and 500 employees in Pennsylvania was not covered in Connecticut by either the federal FMLA or CT FMLA.
When you read the legislative history of the CT FMLA, you find that the legislature was concerned about protecting smaller employers, so it set the coverage threshold at 75 or more employees. There is no evidence that the legislature was concerned about the burden on employers with hundreds of employees but who happen to have fewer than 75 of those employees within Connecticut. Judge Cohn’s decision merely reflects a) the plain language of the statute, and b) the legislative history.

Dan Schwartz

Peter: Thanks for your comments. While it may only be 13 years old, this case still represents a shift in how this statute has been interpreted. During this time, it’s hard to imagine of a case where an employer in Connecticut could be subject to CTFMLA and NOT FMLA as well. But now that will certainly be the case if this decision is affirmed on appeal.
FMLA has — for better or worse — always been seen as a floor here. If you have 50 or more employees, that’s when you started worrying about FMLA. Under Velez, you could have one employee in Connecticut and be subject to CTFMLA; therefore what you will now have is an even greater confusion as to which statute applies when.
Another example: Suppose an employer has 50 employees in Connecticut, but 25 in California. The employees in CT will all now get CTFMLA protection instead of just FMLA protection. I’m not convinced that is what the legislature was really intending. Certainly the DOL did not believe that to be the case.

Peter Goselin

I have no doubt that at least those employers that have the good sense to seek out your firm’s services will not suffer from confusion.
I think there are ways of crafting a statute to genuinely limit its application to small employers…and that there are reasons to do that, though we might disagree as to just what the threshold ought to be. But in this case we have 1) the legislature reflecting a desire to protect small employers and using the threshold of 75 employees without any qualifier (e.g. “within the state,” or “within a 75 mile radius”); and 2) the CT DOL interpreting the statute NOT to protect the small employer but to protect employers with a small presence in CT – not at all the same thing.
So in the three cases that the CTDOL has heard on this question, the three employers were Boise-Cascade, United Airlines, and Related Management. None of them are small employers. In fact, I would make the argument that Related, which has over one thousand employees, is in competition with other employers in the same business (property management) and, before Velez, was getting an unfair advantage over some of those competitors because they had to comply with the CT FMLA and it didn’t.

Well, you’ve had several years to craft your arguments as the attorney for the Complainant so I respect your position. But given the impact this decision could have on Connecticut-based employers that most of us would view as small, it’s hard to imagine the legislature really intended it as you suggest.
But I suppose that’s why we have the appellate court system.

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